Transaction Overview
Shahin Yazdi successfully placed the 70% LTV cash-out refinance for a 7-unit retail building in Southern California. The loan is fixed for 5 Years at 5.375%.
Challenge: The property is held in a Trust where only half of the ownership entity members were willing to sign for the repayment guarantee – most lenders require a 51% participation or better. All the leases rolled within the first four years of the loan term. The 3rd party engineer uncovered a significant amount of deferred maintenance and roof damage during the due diligence process.
Solution: Mr. Yazdi displayed the financial strength and asset control of the guaranteeing owners to the lender, allowing them to make an exception to their 50+% recourse policy. One major tenant facing a potential lease roll occupies 25% of the gross rentable space had just invested over $100,000 in tenant upgrades. It was unlikely that they would make that significant of a capital improvement and then vacate. Regardless, the property will have benefited from their improvements should they choose to leave upon lease expiration, making the space more attractive to a new potential tenant at a higher rent. One of the remaining tenants is paying below market rent and had been in occupancy for over 15 years. The lender accepted a small TI/LC reserve account for the remaining major tenant until their extension option renews later this year. The lender accepted a reserve account for deferred maintenance costs until the borrower completed the required repairs, allowing the loan to fund on schedule.
